Correlation Between Visa and Finward Bancorp
Can any of the company-specific risk be diversified away by investing in both Visa and Finward Bancorp at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Visa and Finward Bancorp into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Visa Class A and Finward Bancorp, you can compare the effects of market volatilities on Visa and Finward Bancorp and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Visa with a short position of Finward Bancorp. Check out your portfolio center. Please also check ongoing floating volatility patterns of Visa and Finward Bancorp.
Diversification Opportunities for Visa and Finward Bancorp
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Visa and Finward is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Visa Class A and Finward Bancorp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Finward Bancorp and Visa is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Visa Class A are associated (or correlated) with Finward Bancorp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Finward Bancorp has no effect on the direction of Visa i.e., Visa and Finward Bancorp go up and down completely randomly.
Pair Corralation between Visa and Finward Bancorp
Taking into account the 90-day investment horizon Visa Class A is expected to generate 1.24 times more return on investment than Finward Bancorp. However, Visa is 1.24 times more volatile than Finward Bancorp. It trades about 0.4 of its potential returns per unit of risk. Finward Bancorp is currently generating about -0.04 per unit of risk. If you would invest 28,134 in Visa Class A on August 30, 2024 and sell it today you would earn a total of 3,336 from holding Visa Class A or generate 11.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Visa Class A vs. Finward Bancorp
Performance |
| Timeline |
| Visa Class A |
| Finward Bancorp |
Visa and Finward Bancorp Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Visa and Finward Bancorp
The main advantage of trading using opposite Visa and Finward Bancorp positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Visa position performs unexpectedly, Finward Bancorp can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Finward Bancorp will offset losses from the drop in Finward Bancorp's long position.| Visa vs. American Express | Visa vs. PayPal Holdings | Visa vs. Capital One Financial | Visa vs. Upstart Holdings |
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Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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